Getting to the Future First

Context:

The business landscape is littered with the bones of corporate dinosaurs that failed to adapt. Like Kodak, they didn’t respond quickly enough to an emerging discontinuity (digital film). Like Nokia, they seriously underestimated an unorthodox new competitor (Apple). Like Intel, they procrastinated in pursuing a major new opportunity (chips for mobile devices). Or like General Motors, they couldn’t let go of a beloved but slowly dying strategy (the company’s bloated brand portfolio). Today we live in a world that is all punctuation and no equilibrium; a world in which change is relentless, seditious and ever-surprising. And that’s a problem—because most large companies aren’t very adaptable. Time and again, despite their resource advantages, they surrender the future to upstarts.

Today, leaders in every organization must ask themselves: Are we changing as fast as the world around us is changing? Are we capable of regularly reinventing ourselves without the imperative of a crisis? Are we awake, alive, and tuned into what’s popping up on the horizon?

When it comes to answering those questions in the affirmative, too many organizations are hamstrung bystrategic inertia—they venerate legacy strategies, ignore the harbingers of the future, under-invest in nascent businesses and over-invest in the past.

To build a truly adaptable organization, leaders will need to discover ways of …

Guarding against strategy lock-in.

Overcoming denial, arrogance and nostalgia.

Spotting and amplifying weak signals that portend a radically different future.

Generating and testing a wide variety of new strategic options.

Excising all those things in the company’s management processes and culture that reflexively favor more-of-the-same.

Challenge Question:

How can an organization build an evolutionary advantage—so it’s always proactively reinventing itself, always playing offense and never defense, always rushing out ahead of its rivals to claim the future?

What's in a name? It can be clarity or confusion. I wish I could have been involved with Jeremy Hope and Robin Fraser 15 years ago when the name "Beyond Budgeting" was chosen for their book and Round Table. The name creates confusion because it is about what their model "is not" rather that what their model "is". To persuade a seasoned business executive to consider innovation, the name should engage their hopes and dreams, not their anxiety of losing all financial control by eliminating the budget. Having led a project to replace the budget at a $1.2 billion health care organization in the USA midwest, I have had to overcome this anxiety on the part of business leaders as finance committee members. I developed the following lexicon for enterprise financial planning and benchmarking based on my recent experience.

X4F: "Execute for the Future," the alternative to traditional budgeting. X4F is a set of the following three processes that achieve the purpose of traditional budgeting.

6QF: A rolling "6 Quarter Forecast" that is the enterprise financial plan

C2P: "Curent to Prior Actual," used by managers for financial performance benchmarking

S2D: "Staffing to Demand," is creating a staffing strategy that matches staffing to demand flows

In implementing these processes, it was amazing to see senior management's focus shift to the future and implications for strategy of health care industry changes. To replace manager's "meet the budget" financial expectation, a one page set of financial expectations was created. Leaders coach and mentor managers using these expectations, the C2P process and the S2D process.

To build an evolutionary advantage, an organization must fully support and nurture the discovery, exploration, consideration and adoption of new mutations. A small R & D group, supported and promoted by executive management, and staffed with social, creative thinkers could be openly tasked to identify and evaluate opportunities for dynamic adaptation. The key will be defining the purpose and value of the team to the organization as a whole. If they are able to effectively communicate and relate to the parts of the organization, then they should be able to synthesize solutions for permanent evolutionary change. This does not seem complex to me, so I must be one of those with a flexible and adaptable mind. A person that likes to inquire about things that seem unbroken, that likes to imagine changing conditions and what-if scenarios, that likes to re-invent the wheel, and try a far-fetched approach regardless of what others may feel. I found much self-satisfaction in discovering legal, operational and service failures through my own inquisitiveness. I would very much like to grow such a group within an organization.

You're going to have to include a bullet point regarding toleration of higher risk and valuing the long-term over the short. Inertia begins with the love of the bottom line and getting the CFO, BOD and/or share holders to embrace a longer-term view in favor of the short-term gain is a difficult proposition. Maybe that's what you mean by "overcoming nostalgia"...."over-investing in the past"....these run up against management's current "business sense."

In order for an organization to build "evolutionary advantage" it requires members to question everything on a constant basis and a relentless focus on unlocking hidden value and discovering hidden competition. It requires maturity to understand questioning the status quo is accepted and encouraged, not punished.

The first step in fixing a problem is admitting there is a problem, that can be uncomfortable for many and intolerable for a few. Change can and should be exciting and invigorating if done right but it takes fearless leadership. Teams that are supported by their captains and protected from those who would preserve the "because its always been done this way" process almost always exceed expectations.

The sustainability of any organization hinges on leadership’s ability to understand, embrace, and implement change. Whenever leaders are surveyed about what keeps them awake at night, “change” is usually at or near the top of the list. When change initiatives fail, so do leaders. When brands fall into decline, and organizations implode, it’s often due to a company’s inability to change, and ultimately their inability to embrace the future.

The key is for leaders to stop talking about change as a theoretical future state and pull it forward into the present. Change is the path to the future, but the future isn’t some ethereal, distant event – it begins in just a fraction of a second. While all great leaders must navigate the present, they must do so in anticipation of the future. The best leaders understand the present is nothing more than a platform for the envisioning of, and positioning for, the future. If you want to lead more effectively, shorten the distance between the future and present. Beat the competition to the future by pulling the future forward.

I believe that it should be the topic to ponder upon and propose suggestions. It looks so tempting to be able to build such an organization that is proactively reinventing itself. Is it possible to be Usain Bolt of business and be step ahead of competition forever?

MIX seems to be the right platform to discuss this topic at large among great minds to either be hopeful that such organization can be built or to reject this idea of perfect organization.

Personally, I would be inclined to understand whether a single leader can run such an organization? What leadership model would be ideal to build and run such organizations? After all, we would need equally agile leader(s) to run such future proof corporations?

I have an idea regarding this with a particular emphasis on the development sector that can easily be adapted to the business world too. I call it Potential Matrix that I will be elaborating in a paper I wish to submit here.

It is often said, 'the future is already here, it's just not evenly distributed'. My personal view is that there is a default future, which is pretty much where we are headed without any intervention. And there is a crafted future, one where by careful attention and effort we might realize a bright new world of management. Achieving a crafted future is some thing worth considering for this topic.

Nice. Evolution is about blending lots of small components that can fit mutate and then fit together to form different wholes. Applying this to an organisation could shift our perspective to look at organisational components that can link together in different ways. The challenge could look at how components mutate (e.g. what are the service interfaces, what changes could be applied, how are they tested/validated) and how strings of components are linked into a functioning organisation (or several functioning organisations).

The Harvard Business Review/McKinsey M-Prize for Management Innovation is a global open innovation contest designed to enlist the most progressive practitioners and thinkers around the challenge of reinventing management for a new age. It’s time to radically rethink how we mobilize people and resources to productive ends.